Apropos: Scottish Government enjoying record residential property revenues of £89m in the last two months
The Scottish Government has received record revenues of £89 million from residential property in the last two months according to property firm Apropos by DJ Alexander.
The UK-wide letting firm, has analysed official data and found revenues from residential properties from the land and building transaction tax (LBTT) have more than doubled since August. Revenues reached their highest ever monthly total from LBTT of £50.1m from 11,990 residential property transactions during October.
This is a 28.8% increase on Septembers’ £38.9m and 117.8% higher than the August figure of £23.0m. The total is 24.9% higher than October 2019’s £40.1m figure.
These numbers reflect the much larger number of transactions since July when the Scottish Government increased the threshold for paying LBTT to £250,000. The result has been a property boom in Scotland resulting in rising prices and increased Government revenues from property taxes.
David Alexander, the joint chief executive officer of apropos by DJ Alexander, said: “This data highlights how effective raising the LBTT threshold has been in stimulating demand in the property sector and in raising revenue for the Scottish Government which can be used to fund essential services.
“It shows that the property market is extremely sensitive to property tax reductions and would respond well to a continuation of the raised threshold beyond the 31st March deadline. This would ensure that the market does not suddenly end in April and would also provide some well needed funding for Scotland in the coming year.”
He added: “The official data also states that the city of Edinburgh consistently accounts for between 30% to 33% of all residential property revenues each year for the Scottish Government with the no other local authority accounting for more than 9% in any one year.
“This means that the city of Edinburgh alone will have contributed around £16m in property tax for the Scottish government in October alone. The capitals’ appeal as a financial, cultural, and tourist destination means that its property market will remain buoyant in the future and continue to attract visitors, investors and wealthy individuals.
“With so much additional revenue being raised to fund essential services it would surely be prudent to acknowledge that there is a strong case for introducing lower levels of taxation on property when it actually results in raised revenues.”
Mr Alexander concluded: “The sensible and financially beneficial approach for the people of Scotland would be for the Scottish government to accept that lowering property taxes actually raises more money and produces much larger funds for essential services. Given that the economy requires major investment in the coming year maintaining a raised threshold for property taxes would help to substantially stimulate the economy.
“Equally, given the central role that Edinburgh’s property market plays in raising revenues for the Scottish Government it would be practical to look at encouraging investment in the sector in the capital and across Scotland by unifying the levels of taxation on property in line with the rest of the UK for second home owners, property investors, and landlords.”